Rent Fraud

New York’s capacity to house new generations of immigrants and to sustain a diverse population largely depends on maintaining an adequate stock of affordable housing. It is therefore critical that New York protects its rent regulated apartments. The rent stabilization laws do this by regulating how much landlords may increase the rent when existing tenants renew their leases or when new tenants move in. However, once an apartment’s monthly rent exceeds $2,500 and the apartment is vacant, the apartment is automatically deregulated, and the landlord may charge an unlimited rent. This creates an incentive for landlords to illegally raise rents in order to reach the $2,500 limit.

By law, landlords must annually register the rent charged for each rent stabilized apartment with the Division of Housing and Community Renewal (DHCR), an agency of New York State Homes and Community Renewal. Landlords must also report rent increases taken at lease renewals or when renting to new tenants. While rent registration should, presumably, deter landlords from illegally raising rents, advocates regularly see instances of rent fraud by landlords that have gone unchallenged, even when landlords openly submitted evidence of their fraud to DHCR, year after year.

Most troubling, the clock is ticking on tenants’ ability to challenge illegal rents. By law, illegal rents must be challenged within four years of the initial rent fraud. Otherwise, illegally high rents are automatically legalized, simply through the passage of time.

By analyzing rent registration histories (“rent histories”) from 200 randomly selected apartments from across New York City and examining DHCR’s services, this study investigates how often landlords register illegally high rents with DHCR and considers how well DHCR addresses the problem of illegal rent increases. The findings are troubling.